Josh Williams, founder and CEO of Gowalla, surprised the audience during his keynote with quotes like “Badges are bullshit.” and “Gamification isn’t cool.”

What?

For three days we heard that gamification will solve every problem known to mankind: Education, Global Climate Change, ingrown toenails. And, suddenly gamification isn’t cool? Maybe it’s just not cool because Gowalla is losing the battle of location-based services to Foursquare and Facebook Places? Why was it cool when Gowalla signed a deal with Chipotle? And maybe badges are bullshit because Foursquare continues to bank highly on them and thrive?

We could ask these questions but there’s more behind the repositioning

When you’re losing to your competitor, you re-evaluate your mission and your vision. You have done everything in your power to beat them but, for some reason, they are leading in each and every category. And you start to realize that the initial reason for starting your company might have been forgotten while trying to catch-up with your competitors. You never meant to be like Foursquare (just like Yahoo never wanted to be like Google and the comparisons were always weak and meaningless) and you always tried to differentiate yourself by offering passports, connecting people with experiential places. But the public didn’t see this subtleties, they saw you as the LBS loser.

You have two options: Either dig in and continue the war until the bitter end. Or change the game.

Gowalla decided to change the game, transforming the service into a storytelling platform where people can document their memories by associating them with the places where they happened. No specific plans were revealed but it’s likely that Gowalla will add tools that will help people to add more content around specific places. The gamification part of the platform seems to be destined for the pile of buzzwords. And the pro-active part of check-in might change to a more passive activity.

A good move by Gowalla. The execution of their revised vision will determine if user will follow them on their new path.